Progressiveness
The tax system has become less fair in some respects over the last few decades.
Recent governments have progressively reduced corporation tax, which was at 26% in 2011 and had reduced to 19% by 2017, with the pre-covid intention of further reducing it to 17% before this policy was reversed in early 2021.
Meanwhile, changes to income tax rates and bands have caused fluctuations in the progressiveness of income tax over the years. VAT has become more regressive in recent years as the rate has risen to 20%, while a failure to revise property rating bands for council tax has made this even more regressive than it was before.
An increasing number of exemptions, allowances and reliefs have also reduced the progressiveness of the tax system by enabling larger taxpayers to reduce their contributions, as well as increasing the opportunities for avoidance. These trends are largely driven by deliberate political choices.
Effectiveness
The tax system continues to be much less effective than it could or should be.
There have been legislative changes over the last few years that, combined with increasing public anger at corporate tax avoidance, have curbed some of the more egregious examples of profit-shifting by multinational companies.
However, the system is still deeply unfair in the way that 'white collar crime' (e.g. tax fraud) is prosecuted far less harshly than 'blue collar crime' (e.g. benefits fraud). This is partly because tax avoidance is widely seen as being legal (when in fact it is not, even if it is not always a criminal offence), and partly because of weak HMRC enforcement. The latter is not helped by the fact that HMRC's funding and staffing levels have decreased sharply in recent years, but is also linked to a deliberate decision by HMRC not to investigate and prosecute tax fraud more aggressively - in part because the criminal justice system would buckle under the pressure if tax fraud was dealt with in the same way as benefits fraud. This has got worse recently (the number of prosecutions for tax-related crimes has halved over the last five years). As our friends at Taxwatch have argued, “although tax avoidance operates in the margins and gaps of the law, and as a result may not be explicitly prohibited by law, most tax avoidance is unlawful in the true meaning of the word.”